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Canadian homes prices down 5.4%

Several pricey markets drag averages down in September

The Canadian Real Estate Association says the falling average sale price nationally is a reflection of a decline in sales in the highest-priced markets, noting that prices are still rising in a majority of markets. The Ottawa-based group, which represents more than 100 boards across the country, said the average sale price of an existing home, sold through the MLS system, fell 5.4 per cent in September to $289,916 from $306,347 a year earlier. But it said prices are actually up in 65 per cent of the boards it represents.

"The recent price declines in the Canadian housing market reflect lower activity in some of Canada's priciest housing markets that had posted large price increases. Price declines in the U.S. reflect a massive oversupply of housing due to soaring foreclosures and overbuilding," said Calvin Lindberg, the president of CREA.

Vancouver, the most expensive market in the country, has had year-over-year sales declines in the 40-per-cent range, and many real estate analysts suggest the results are skewing the national number. Some of the price trends by province included a 7.4-per-cent decline for British Columbia to an average of $412,149, and a five-per-cent fall in Alberta to $342,052.

On the other hand, the average sale price in Saskatchewan was up 23.2 per cent to $229,381, and Newfoundland and Labrador's going rate for housing rose 17.5 per cent to $178,062.

B.C.'s average price was no doubt influenced by a 33.6-per cent-decline in sales in September, compared to a year earlier, to 7,688. In Newfoundland, sales were up 26.2 per cent to 431.

CREA said the supply of new houses reaching the market is also shrinking. It said there were 230,107 new listings in the third quarter on a seasonally adjusted basis, down 3.1 per cent from the previous quarter, which was the highest on record.

Home Sales

September home sales price movements by percentage (from September 2007):

Source: CREA

October 31, 2008 in Canadian Real Estate Market | Permalink | Comments (1) | TrackBack

Toronto Real Estate Board's AGM

A panel of real estate industry experts says: The resale housing market in the Greater Toronto Area is still heathy.

More than 1,100 Greater Toronto Area realtors gathered to hear some of Canada's top real estate industry experts talk about the future of the housing market at the Toronto Real Estate Board's 88th Annual General Meeting on October 27th.

Much of their discussion was focused on current market conditions, with panelists attributing a recent dip in the Toronto area  resale housing market to waning consumer confidence.

"People are mislead by the media," said Living Realty's Stephen Wong. "We don't have a problem; it's being self-inflicted."

Panelists also agreed that while a return to robust conditions may not be seen until 2010, the market continues to be balanced and supported by the economic fundamentals of strong employment and immigration, and historically low interest rates.

In addition, Royal LePage's Phil Soper noted that unlike other major cities, the GTA has not experienced artificially inflated house prices.

"We're going through a time of general economic malaise but it is not going to be prolonged and in the housing market we're not going to see a reset because it wasn't off in the first place," he said.

TREB President Maureen O'Neill's speech focused on raising the bar with respect to professionalism, an idea that was echoed by Michael Polzler of RE/MAX Ontario-Atlantic.

"This is a time for professional realtors who know the business and all aspects of it, to lead people through complicated transactions," he said.

Panelists concluded their discussion by pledging to support organized real estate's lobbying efforts against unrealistic regulatory expectations and unfair taxes, like the Toronto Land Transfer Tax.

"This event's incredible turnout demonstrates realtors genuine desire to continuously improve in order to provide the highest level of service to their clients," said Ms. O'Neill. "We're also delighted to have received the full support of Canada's largest real estate companies as we continue our efforts to advocate on behalf of GTA property owners."

The panel on the future of real estate included:


Don Lawby, President and Chief Operating Officer
Century 21 Canada Limited Partnership


Gary Hockey, President
Coldwell Banker Canada


Kimberly Fleming, Regional Director, Canada
Prudential Real Estate Affiliates


Howard Drukarsh, Vice-President
Right at Home Realty Inc.


Phil Soper, President and Chief Executive Officer
Royal LePage Real Estate Services Ltd.


Stephen Wong, Chairman
Living Realty Inc.


Michael Polzler, Regional Director and Executive Vice President
RE/MAX Ontario-Atlantic Canada


Andrew Cimerman, Chief Executive Officer and Founder
HomeLife Realty Services

October 30, 2008 in Toronto Real Estate Board | Permalink | Comments (10) | TrackBack

Toronto Real Estate Trends

Agents told to brace for tough times at the Toronto Real Estate Board annual meeting as industry leaders try to put a positive spin on an expected downturn in home sales and prices.

A crowd of more than 1,000 real estate agents and brokers, including many who joined in the boom and have yet to live through a downturn, gathered yesterday in Toronto for an industry pep talk. The message they got was to expect Canada's residential real estate market to be rocky in 2009, but that it would be followed by a brighter picture for 2010.

In the meantime, a lot of the talk at the Toronto Real Estate Board's (TREB) annual general meeting centred around what do to ride out the slowdown. In tough times, agents will drop out, brokerages will consolidate and cut costs, and everyone will have to make better use of technology, a panel of eight Canadian real estate company representatives said at the event.

Serious agents who stick out the downturn will have the opportunity to shine, they added, although their optimism appeared lost on some participants.

"They're basically saying that next year is a writeoff," one audience member told her colleagues.

The downturn may have a silver lining, causing the industry to "raise the bar" on customer service, said panelist Michael Polzler, regional director at Re/Max.

"There are far too many agents out there who don't specialize, who do just two or three deals a year. Would you use a part-time lawyer or a part-time dentist? We need to raise the bar," Mr. Polzler said.

The average number of housing units sold per realtor each year in Canada is just 5.7, reflecting the number of part-timers, said Phil Soper, chief executive officer of Royal LePage Real Estate Services Ltd.

There were 95,000 realtors in Canada last year, up from 77,000 in 1987, Mr. Soper said. During that time yearly industry revenues rose from $30-billion to $160-billion, he added.

As the real estate pie shrinks over the next year, agents and brokers must listen to customers and become consultants rather than marketers, said panelists Gary Hockey, president of Coldwell Banker Canada and Kimberly Fleming, regional director at Prudential Real Estate Affiliates.

The meeting came on the heels of a midmonth report from TREB showing sales for the first half of October in the GTA plummeted 21 per cent from a year earlier, and the average resale home price declined by 15 per cent.

Sales and prices in other markets across the country, including Vancouver and Calgary, have also slumped. Depending on the region, the downturns have variously been attributed to lack of affordability, the economy, and taxes.

The negative effect of a land transfer tax that came into effect in February will be reflected in Toronto's sales numbers for October, which are due out next week, said TREB spokesman Von Palmer.

In Vancouver, agents with more experience are being asked to mentor those who haven't gone through a downturn before, said Dave Watt, president of the Real Estate Board of Greater Vancouver, in a telephone interview.

"We're also telling our members...we're well funded. Our biggest concern is that for the 90 per cent of our members that will remain in the business...all of our services and the products they rely on...will not be pulled back," Mr. Watt said.

October 28, 2008 in Toronto Real Estate Trends | Permalink | Comments (4) | TrackBack

Toronto Rental Market Report

Rental Transactions and Rental Rates both increase

Both leased transactions through the TorontoMLS system and monthly rents achieved in these transactions climbed in the second four-month period of 2008. Total units rented came to 4,297 (apartments and townhouses), up 12 per cent over the same timeframe in 2007. Meanwhile, benchmark two-bedroom apartments rented for $1,885 per month, up one per cent over the $1,860 per month recorded in the corresponding period of 2007, and in fact, rental prices in all categories rose.

The most active districts for rentals within the GTAfor apartment rentals remained in the downtown core (C01, which had 1,130 rental transactions), North York (C14, with 500 rentals), and Cooksville (W15, with 402 rentals). With townhouses, the most active districts were within Mississauga (W19 and W20, with 33 and 49 rentals respectively), and North York (C14, with 26 rentals).

As noted previously, rents in all categories of leased property increased during the May to August period. For example, bachelor apartments increased to $1,216 per month, from the $1,167 per month recorded in the middle portion of 2007, a four per cent rise. Three-bedroom townhouses saw a significant increase, up seven per cent to $1,780 per month from last year’s $1,661 figure.

See full Toronto rental report »

October 23, 2008 in Toronto Real Estate Trends | Permalink | Comments (5) | TrackBack

Central Bank Cuts Interest Rate

Bank of Canada warns of 'mild recession'

In a surprise move today, the Bank of Canada sliced interest rates by only one-quarter of a percentage point to 2.25 per cent — a milder cut than what many investors were expecting. In a statement, the central bank said major interrelated developments are having a "profound impact" on the Canadian economy.

The intensification of the global financial crisis has led to severe strains in financial markets. The associated need for the global banking sector to continue to reduce leverage will restrain growth for some time. "Canada's economy and strong financial system will benefit directly from these actions," said the statement.

Still, the weaker outlook for global demand will increase the slowdown on the Canadian economy coming from exports. The tightening in Canadian credit conditions will also restrain business and housing investment, said the Bank of Canada.

October 21, 2008 in Arranging Mortgage Financing | Permalink | Comments (1) | TrackBack

Toronto's land transfer tax falls short

Toronto's new land transfer tax isn't quite the solution to the city's budget crisis it was touted to be when Mayor David Miller finally pushed the controversial measure past city council last fall. The city had projected it would collect about $155 million in 2008, already considerably less than the $300 million per year mentioned in the original pitch. But the first five months of the tax actually brought in only $54.8 million.

Since then, the credit crunch, stock market gyrations, recession fears and possible budget deficits in the federal and provincial governments have taken a toll on consumer confidence – and on real estate values.

The official line is that the tax is still on-target for this year, avoiding a huge hole in the budget. But that would require collecting $100 million in just six months, which would seem impossible given the declining market and the fact the typical top sales months are already past.

And so far, no one at city hall is offering projections for next year.

Miller and allies got the transfer tax passed last year after an acrimonious, months-long debate on the grounds it would save taxpayers from a punishing tax hike. They succeeded only after a summer of budget-slashing, followed by compromise.

The tax was originally supposed to mirror the provincial land transfer tax, with rates that would generate $300 million annually. But to ensure council approval last October, the rates were lowered. For example, on a $400,000 home, the provincial tax is $4,475; the city tax only $3,725. Also, first-time buyers qualify for a rebate up to $3,725.

Councillors complain they've been kept in the dark about the tax revenue figures.

Councillor Michael Thompson has asked Miller in writing for details of contingency plans should the land transfer tax fall short, and whether service cuts may be needed to balance the 2009 operating budget. He hopes for an answer by next week's council meeting. "Specifically as it relates to the land transfer tax, I don't think we've been kept up to date on it," Thompson said.

The mayor expects to be able to balance the budget, including a 2 per cent to 4 per cent increase in the property tax to meet inflation, but without imposing big service cuts, said spokesperson Stuart Green.

"The mayor's plan all along is to introduce budgets that are balanced. We were able to do that last year and we should be able to do that this year," Green said.

But Von Palmer, spokesperson for the Toronto Real Estate Board, says the housing market "seems to be in a downward trend." "There's no doubt that the land transfer tax isn't helping," he said yesterday. "It's an upfront cost that people have to pay."

Councillor Paul Ainslie, a member of the budget committee, said officials referred to declining numbers when he recently asked about revenues from the new taxes."That's when they started saying ... it's nowhere near where it was expected to be," Ainslie said.

Other councillors on the budget committee, however, say concerns about a declining real estate market are overblown.

Councillor Adrian Heaps said developers have had no trouble selling out a new subdivision at Warden and St. Clair Aves. Even high-end homes are selling, he said.

Source: Paul Moloney reporting in the Toronto Star.

October 21, 2008 in Toronto Real Estate Taxes | Permalink | Comments (1) | TrackBack

Prices down 15% | Sales down 21%

Toronto Real Estate Board: Changing GTA resale housing market reflects economic times.

Activity in the Greater Toronto Area resale housing market moderated considerably during the first half of October with 2,700 homes changing hands, Toronto Real Estate Board President Maureen O’Neill announced today.

Sales volumes in the GTA decreased 18 per cent compared to the first half of October 2007, when 3,297 transactions were recorded and are down 10 per cent compared to the same period in 2006 when 3,007 sales took place.

In the City of Toronto 1,140 sales took place in the first half of this month. This represents a 21 per cent decline from the 1,446 sales that took place in the same period a year ago and a 13 per cent decrease from the 1,312 transactions recorded in the first half of October 2006.

In the 905 Region there were 1,560 sales in the first two weeks of this month, a 16 per cent decrease from the 1,851 transactions that took place during the same time frame in 2007 and down eight per cent from the 1,695 homes sold during the first half of October 2006.

House prices declined throughout the GTA during the first half of the month. The average price of a GTA home is currently $353,772, down 11 per cent from $399,013 recorded the comparable period in 2007.

In the City of Toronto the current average price $375,804, a 15 per cent decrease from the $441,878 average recorded at mid-October 2007.

In the 905 Region the average price of a home is currently $337,671. This represents an eight per cent decline from the $365,527 average recorded during the first half of October 2007.

With 27,559 properties currently listed on the TorontoMLS system, there is now 30 per cent more available stock from which to choose as compared to a year ago when 21,182 homes were listed.

“More choice can mean slightly longer wait times for sellers whose homes are now on average, selling after 34 days on the market as compared to 29 days a year ago,” said Ms. O’Neill. “The list to sales ratio is 97 per cent of the list price.”

Increased sales activity was noted in specific pockets located throughout the GTA.

Sales in Oshawa (E16) increased 15 per cent compared to the first half of October 2007, based mainly on solid sales of detached homes.

In Brampton West (W24) sales in the first half of October increased 21 per cent compared to the same period a year ago mainly due to strong attached row house sales.

Downtown East (C08) experienced a 16 per cent overall increase in activity compared to mid-October 2007 primarily as a result of condominium apartment sales.

Newmarket saw a 17 per cent increase in sales compared to the first half of October 2007 as a result of strong condominium apartment and semi-detached home sales.

Previous news releases have incorporated 2006 comparisons. This was necessary in order to place the market statistics in a broader context. We will be referencing 2006 in its entirety at the end of the month when it will be more relevant.

“While we continue to watch the economic picture globally, it is the local real estate climate that will determine our market place,” said Ms. O’Neill. “After the 2007 record highs, 2008 is an encouraging market for buyers.”

October 17, 2008 in Toronto Real Estate Update | Permalink | Comments (12) | TrackBack

MLS listings down 3.3% from peak

Fewer Canadian homes were sold in the third quarter but the number put on the market also dropped – a sign that a slide in housing prices is beginning to slow, says the Canadian Real Estate Association.

New listings of homes for sale on the Multiple Listing Service in major Canadian markets edged lower in the third quarter of 2008, due primarily to easing in Edmonton and Calgary, the Canadian Real Estate Association said Wednesday.

Seasonally adjusted new listings declined by 3.3 per cent from their peak in the second quarter of 2008, causing the balance of sales to new listings in the resale home market to tighten on a quarter-over-quarter basis for the first time since the beginning of 2007.

But compared to the third quarter of 2007, new listings increased by 6.5%.

There were 146,637 new residential listings on a seasonally adjusted basis in the third quarter of 2008, compared to 151,573 in the second quarter. New listings in Edmonton and Calgary eased the most, followed by declines in Vancouver and Montreal.

"Informed buyers and informed sellers look at the facts. And the facts right now indicate the real estate resale market is stabilizing in many markets," CREA president Calvin Lindberg said in a statement.

Seasonally adjusted MLS residential home sales in Canada's major markets declined by 1.5 per cent quarter-over-quarter to 76,391 units, due primarily to fewer sales in Vancouver. Year-over-year, home sales plunged by 10.7 per cent.

Lower sales activity in higher-priced markets pulled the overall average price for MLS residential listings in major markets down by 6.2 per cent year-over-year in September, despite average price gains in 17 of 25 major markets.

"Price declines in some of Canada's more expensive housing markets will outweigh further price gains in other markets and continue pulling the national average price lower over the rest of the year and into 2009," CREA chief economist Gregory Klump said in a statement.

But "Canadian homebuyers should not expect to see the kind of price correction that's underway in the U.S., where overly indebted homeowners are selling into a housing market where foreclosures and the number of newly constructed unoccupied homes are increasing," Klump added.

October 15, 2008 in Canadian Real Estate Market | Permalink | Comments (2) | TrackBack

Where did the money go?

All the money lost in the stock market and the housing crash never really existed, economist says

Trillions in stock market value – gone. Trillions in retirement savings – gone. A chunk of the money you paid for your house, the money you're saving for college, the money your boss needs to make payroll – gone, gone, gone.

Whether you're a stock broker or Joe Six-pack, if you have a mutual fund or a college savings plan, tumbling stock markets and sagging home prices mean you've lost a whole lot of the money that was right there on your account statements just a few months ago.

But if you no longer have that money, who does? The fat cats on Wall Street or Bay Street? Some oil baron in Saudi Arabia? Or China?

Or is it just – gone?

If you're looking to track down your missing money – figure out who has it now, maybe ask to have it back – you might be disappointed to learn that is was never really money in the first place.

Robert Shiller, an economist at Yale, puts it bluntly: The notion that you lose a pile of money whenever the stock market tanks is a "fallacy."

He says the price of a stock has never been the same thing as money – it's simply the "best guess" of what the stock is worth.

Shiller uses the example of an appraiser who values a house at $350,000 (U.S.), a week after saying it was worth $400,000.

"In a sense, $50,000 just disappeared when he said that," he said. "But it's all in the mind."

Though something, of course, is disappearing as markets and real estate values tumble. Even if a share of stock you own isn't a wad of bills in your wallet, even if the value of your home isn't something you can redeem at will, surely you can lose potential money – that is, the money that would be yours to spend if you sold your house or emptied out your mutual funds right now.

And if you're a few months away from retirement, or hoping to sell your house and buy a smaller one to help pay for your kid's college tuition, this "potential money" is something you're counting on to get by. For people who need cash and need it now, this is as real as money gets, whether or not it meets the technical definition of the word.

Still, you run into trouble when you think of that potential money as being the same thing as the cash in your purse or your chequing account.

"That's a big mistake," says Dale Jorgenson, an economics professor at Harvard.

There's a key distinction here: While the money in your pocket is unlikely to just vanish into thin air, the money you could have had, if only you'd sold your house or drained your stock-heavy mutual funds a year ago, most certainly can.

"You can't enjoy the benefits of your (pension) if it's disappeared," Jorgenson explains.

"If you had it all in financial stocks and they've all gone down by 80 per cent – sorry! That is a permanent loss because those folks aren't coming back. We're going to have a huge shrinkage in the financial sector."

If you choose, you can pour most of your money into stocks and track their value in real time on a computer screen with other investors, confident that you'll get good money for them when you decide to sell.

But that collective confidence, Jorgenson says, is gone. And when confidence is drained out of a financial system, a lot of investors will decide to sell at any price and a big chunk of that money you thought your investments were worth simply goes away.

And don't blame speculators, Jorgenson says.

"Those folks in general have been losing their shirts at a prodigious rate," he said. "They took a big risk and now they're suffering from the consequences."

October 13, 2008 in World View [of real estate] | Permalink | Comments (5) | TrackBack

Canadian housing prices still cooling

New housing prices continued to cool in August, posting no increase from July and leaving them just 2.3 per cent higher than a year earlier, down from 2.7 per cent a month earlier, Statistics Canada reported Friday.

Regionally, prices rose at the fastest pace in St. John's, N.L., with an annual price increase of 23.7 per cent, with builders there saying material and labour costs, as well as higher land development costs, contributed to the increases, the federal agency said.

Regina, which registered no monthly price change in August, had the second highest annual increase at 23.1 per cent, but down from its record increase of 34 per cent posted in April.

'The housing market in Canada continues to cool as the housing cycle winds down. As a result, we expect housing to continue its drag on GDP in the coming quarters in conjunction with other negative contributors,' said a TD analyst Friday.

In Saskatoon, prices fell 3.1 per cent in the month, and though still eight per cent higher than a year earlier, confirming a decelerating trend there, Statistics Canada said.

In Edmonton prices were down 5.7 per cent from a year, a 23-year low, while prices in Calgary were down 1.1 per cent, the weakest performance since 1991.

On the West Coast, Vancouver prices were up 1.5 per cent over the previous 12 months, while in Victoria prices were off 0.3 per cent from a year earlier.

In Toronto, prices were 3.4 per cent higher than a year earlier, while in Ottawa they were up 4.1 per cent, Quebec City saw a 6.1 per cent rise and Montreal was 5.2 per cent higher.

"The housing market in Canada continues to cool as the housing cycle winds down," noted TD Securities analyst Ian Pollick. "As a result, we expect housing to continue its drag on GDP in the coming quarters in conjunction with other negative contributors."

October 11, 2008 in Canadian Real Estate Market | Permalink | Comments (1) | TrackBack

 

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